Apollo Global to acquire Tech Data in $6bn amended deal

February 2020 | DEALRFONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

February 2020 Issue

Following a previously announced definitive agreement, US multinational IT products and services distributor Tech Data has amended said agreement, in which Tiger Midco, LLC – an affiliate of funds managed by affiliates of private equity (PE) firm Apollo Global Management – will acquire all of the outstanding shares of Tech Data common stock.

The amendment means that the consideration to be received by holders of Tech Data common stock has been increased to $145 per share in cash from $130 per share in cash, among other changes. The revised purchase price represents an 11.5 percent increase in the price per share of Tech Data’s common stock in the original agreement.

The revised purchase price also represents a 30.2 percent premium to the unaffected closing share price of Tech Data’s common stock ended 15 October 2019, the last trading day prior to published market speculation regarding a potential transaction involving Tech Data. The revised transaction has an enterprise value of approximately $6bn.

With an end-to-end portfolio of products, services and solutions, highly specialised skills and expertise in next-generation technologies, Tech Data enables channel partners to bring to market the products and solutions the world needs to connect, grow and advance. The firm is ranked number 88 on the Fortune 500 and has been named one of Fortune’s ‘World’s Most Admired Companies’ for 10 straight years.

The Tech Data board of directors has unanimously approved the amendment agreement and has recommended that Tech Data shareholders vote in favour of the transaction.

Tech Data’s acquirer, Apollo Global Management, is a leading global alternative investment manager. The firm had assets under management (AUM) of approximately $323bn as of 30 September 2019 in credit, PE and real assets funds invested across a core group of nine industries where Apollo has considerable knowledge and resources.

Following its acquisition, Tech Data is expected to remain headquartered in Pinellas County, where it was founded by Edward Raymund in 1974 to sell computer tapes, disk packs and other supplies for mini and mainframe computers directly to users.

“This is an excellent deal for shareholders,” said former Tech Data chief executive and board chairman Steven Raymund, whose father founded the company. “There is a lot of action right now in the PE world. Many of these PE firms are loaded to the gills with cash. Interest rates are low.

“Tech Data’s valuation was attractive, I think, for a PE company because of its cash-generating abilities,” he continued. “Distribution companies are very popular targets with PE because of their generally light fixed capital footprint, which means they do not need to continue to make a lot of investment to grow other than in working capital.”

Serving as financial adviser to Tech Data is Bank of America Securities. Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel.

The transaction is not subject to a financing condition and is expected to close in the first half of 2020, subject to the satisfaction of customary closing conditions including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, foreign regulatory approvals and approval by the holders of a majority of the outstanding Tech Data shares.

“Tech Data has built a great culture and a great team over the last 45 years,” added Tech Data chief executive Rich Hume. “This sale acknowledges that we are the premier IT distribution firm in the industry.”

Fraser Tennant